GOOGLE ANALYTICS

Thursday, September 14, 2017

What they want to say and what we want to hear? Many of us might have
forgotten that Iceland faced a hard time when its banks went for toss and
Norway SWF too the bet much before in these banks at the time of collapse. Norway’s
shorting of Icelandic bonds particularly in anticipation of the weak ,over
leveraged Icelandic financial meltdown lead an opportunity for SWF to hedge
against an for a country that already which had significant exposure to that
particular industry. By the way don’t forget George Soros too. In 1992
international investor George Soros famously “broke” the Bank of England by
shorting more than US$10 billion worth of pounds, pocketing more than US$1
billion in the process and forcing the Bank of England to withdraw from the
European exchange rate mechanism (ERM).

History repeats but the cleavers
are the ones who identify the history and takes immense opportunity from the
same. In 2008 recession the SWF took around billions of pledges mostly in
advance through various financial instruments among those who were used to
Claimed As Too BIG TO FAIL. The trend of taking opportunity is the key
direction for understanding the long term repercussion of the act.The below data reflects when the SWF took exposure and how much information they carried for the collapse of 2008 financial collapse. This raises the eyebrow for finding the trend and understanding the pattern.

SWF lost million to when the
invested between November 2007 to 2008 but the made many times of what they
lost. The below stake holding details will make the subject more clear. Chaos
theory says patterns needs to be followed which gives indication of the upcoming
trends of events.

Identification of opportunity for
SWF is clearly shows when on January 15th 2008 much before the Lehman Brothers
collapse in September 15th 2008, the governments of Singapore, Kuwait and South
Korea provided much of a $21 billion lifeline to Citigroup and Merrill Lynch,
two banks that have lost fortunes in America's credit crisis. They
invested and saved the banks and later on standing at 2017 please calculate the
returns these SWF made from the stake they hold. Buy back of Shares was the
Boon funded by QE. SWF In 2008, accounted for 28 percent of the deals, worth 75
percent of the total value ($96.2 billion).

Currently the world largest SWF
Norways officially known as the Government Pension Fund of Norway, which stands at $1 trillion has changed its
strategy towards equity where it increased its equity exposure to 70% from 60%
and cuts down on corporate bonds and only exposure towards government bonds. Further
is will invest in dollar, pound and not yen as yen liquidity is a problem.
Further might face problem of North Korea related problems later on. Brexit is
an opportunity for the pound and hence its bet keeping the long term vision.

These changes indicates many
aspect but as per my limited thought a short position on global equities and
also buying at low levels leads to increase of asset allocation towards
equities. a 2ndly government bond tends to be a safe bet when equities and
economic warfare comes into game. Currently the SWF has about $80bn — was in
corporate bonds. They will slowly liquidate and wait for the maturity and more
over they will not take additional exposure.

The top 10 holdings of the
fund, as of August 2017:

·Apple

·Nestle

·Alphabet

·Royal Dutch Shell

·Microsoft

·Novartis

·Roche Holding

·Amazon

·HSBC

·Johnson & Johnson

Crude as an asset class is no
longer a viable multiplier of returns now hence equities are the best to play
with. With some $6.5 trillion in assets, sovereign investors already account
for 19 per cent of capital committed to private equity. By the end of 2016, 61
per cent of SWFs had allocations to private equity, a record high, and 63 per
cent to real estate. When assessing maturity, NBIM said a set limit of
no greater than 10 years would allow for more consistent returns across
countries, increased stability and increased immunity to the impact of
adjustments by non-price-sensitive players. Technological shifts and uncertain
economic growth have leas SWF to think in this pattern.

Are we heading for a collapse
may be since valuations and growth in prices gap are widening and hence the
essence of reliability is weaning. Geo-political tension is another headache
which can turn the wieners into losers. Every economy of a country cannot grow simultaneously
when ground realities says gap is
widening. SWF change of pattern
indicates silently many things which we need to read and understand .

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I am a economic,financial writer and research analyst. I am an Economist |Editor | Author | Columnist | Speaker|Strategist|. Digging out facts and making indepth analysis of financial matters is my life work.I love discussing and making financial strategies to meet the financial objectives of the life.At the same time I am an avid reader. Books are my passion. No matter how busy I am, I always manage to find time for reading. I also enjoy cooking good food, Hindi music & a good cup of coffee.One of my personal traits I am most proud of is being creative and artistic.

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